Great news: Mass layoffs making a comeback

posted at 10:05 am on July 22, 2011 by Ed Morrissey

In 2009, we tracked a previously-obscure jobs statistic: mass layoffs. Those peaked in the autumn months following the Porkulus bill’s passage and then began to subside as the job destruction cycle slowed. Since then, we have mainly looked at the job creation numbers, which have remained in positive but anemic territory on a month-to-month basis.

Meanwhile, state and local governments have cut 142,000 jobs this year, The WSJ reports, and Wall Street is braced for another round of cutbacks. This week, Goldman Sachs announced plans to let go 1000 fixed-income traders.

If these trends continue, we may soon be talking about losses in the monthly employment data — not just disappointing growth, says Howard Davidowitz, CEO of Davidowitz & Associates[.]

The Bureau of Labor Statistics has kept the mass-layoff series in place, of course, which gets reported around mid-month. June figures are due soon, but May saw a slight uptick in events, although a slight decrease in the number of resulting claims:

Employers took 1,599 mass layoff actions in May involving 143,540 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today. Each mass layoff involved at least 50 workers from a single employer. The number of mass layoff events in May increased by 35, or 2 percent, from April, while the number of associated initial claims decreased by 387, or less than 1 percent. In May, 373 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 38,673 initial claims; both figures increased over the month.

This note on manufacturing doesn’t look like a sign of good things to come:

The manufacturing sector accounted for 20 percent of all mass layoff events and 21 percent of initial claims filed in May. A year earlier, manufacturing made up 16 percent of events and initial claims. Within this sector, the number of claimants in May 2011 was greatest in the food and transportation equipment subsectors. Twelve of the 21 manufacturing subsectors experienced over-the-year increases in initial claims, with the largest increases occurring in food and in transportation equipment.

The BLS lists the ten industries most impacted by mass layoffs in May, which is an interesting table. Four of those industries (food service contractors, full-service restaurants, commercial plumbing/HVAC contractors, and casino hotels) had their peak in mass-layoff events in 2009, which is predictable. But four others (day care, colleges/universities, junior colleges, and “other individual and family services”) have had their peak in mass-layoff events in 2010 or 2011.

In looking at the historical table, which only goes back as far as mid-2007, the levels have begun rising again. In March of this year, mass layoff events slowed to 1,286, the lowest figure since October 2007, just before the recession started. In two months, the level bounced upward 24.3%, back to a level more consistent with 2010’s mass-layoff levels. The number of claimants from these events jumped by 21.1%.

So the problem we face at the moment is not just a lack of job creation. We are beginning to see job destruction again, as demand falls and consumer confidence plummets. Businesses react to this in rational ways, which is to shed excess labor and curtail expansion. Don’t be surprised to see low job-addition numbers over the next few months — or possibly negative numbers — unless you work for Reuters.

Update: The June numbers have replaced the May numbers today after I posted this. June events totaled 1,532, which is a drop of 4% from May but still a 19.1% increase over February. The number of claims from these events barely budged, still up 21% over February — and of course, these are all new layoffs.

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Meanwhile, state and local governments have cut 142,000 jobs this year, The WSJ reports, and Wall Street is braced for another round of cutbacks. This week, Goldman Sachs announced plans to let go 1000 fixed-income traders.

Gee…I wonder if this has anything to do with the stimulus spending ending.

This may be getting to the point that even if the economy starts to improve, it wont be enough to save him. But I honestly don’t think he wants to. I am convinced he is following a Cloward/Piven path to destroy our free market system and replace it with a Marxist model.

More people will be lining up for unemployment benefits and, with escalating food and fuel prices they will be forced to apply for food stamps.

I see people everyday using food stamps who would never have thought they would have to ask for anything. It’s humiliating, but what can they do?

This administration has made such a mess of this country that it’s astonishing. To continue to ignore sound advice and do what has worked in the past to rejuvenate the economy must be intentional. There is no other explanation.

BOR the Buffoon was on Fox News this morning flogging his plan for the budget, increasing revenue by eliminating what he calls loopholes, and a 1% sales tax.

Someone get to this moron please. An hour a day is already too much of him. That’s all we need is an excuse for the IRS to hire a few more thousand thugs. Then 1% becomes 2%…

slickwillie2001 on July 22, 2011 at 10:14 AM

And the tax code will include loop holes for lower income Americans. The question is will they have to wait to get the tax break until they file their taxes? Poor people can’t afford to pay that extra tax on a vehicle purchase and wait you a year to get it back. Will some politician decide that low income Americans that are exempt from the tax will have to be issued a special card? If so, it will create a market for those that are making just over the minimum income to get fake cards.

And did you notice how BOR moderated his criticism of the Tea Party? hahahaha. He must have been blasted in emails.

After work today, I will be stopping by the nearest Borders to use my Rewards card for the last time, and I will probably do so with tears in my eyes, because for years I loved going there all the time to browse the new books and catch up on some of the classics.

It seriously pisses me off that they too have fallen victim to the economic mess we have right now. It just is not fair that great places like Borders are being brought down by what amounts to government financial economic mismanagement.

Not so sure this is a trend. Some of the mentioned companies are linked to specific events. Lockheed, I understand is being affected by the termination of the space shuttle program. Borders is a victim of new technology and mismanagement. They should have gone the route of B&N and moved towards the e-book model. I loved going to Borders, but the prices were outrageous, even when compared to the B&N which was on the other side of the street.

Reuters must be made up of Obama administration staffers, with cozy six figure jobs! I fell out of my chair when they declared yet again yesterday that 400000 job loss is a sign of a stable job market.

In other news, Jeffrey Immelt issued a statement today that says, in part, that an innovative new law, which will be entitled the “Anti Dog-Eat-Dog Act of the year 3 of the Glorious Reign of the Party” is presently under consideration in the administration.

The clear purpose of such an Act will be to establish some semblence of order in the marketplace, to encourage employers to do their patriotic duty and “Support Dear Leader in achieving full employment before the end of the current Four Year Plan in 2012!” (as Immelt was heard to exclaim) and to reward those companies who best exemplify the principals and values of the New America.

General Electric shareholders have not yet been heard from on the subject.

In other news, bombs exploded today in the general offices of Home Depot and in Wynn Hotels and Resorts. Homeland Security has taken charge of the investigation from local authorities, and has ascribed the explosions to unnamed “dissident American groups, obviously working closely with al Qaeda.” New cameras will be installed around and within the homes and offices of all company executives, for their own protection.

But..but you’ve got to give Black Messiah a little more time to work his healing magic. The wonderful elixir of government regulation stifling small business hasn’t really kicked in yet-nor the hiring freezes caused by Obamacare-and just wait until all the funny money (1.6 trillion) starts circulating adding high inflation to high unemployment.And what happens when we’re 95% dependent on enemies for our energy supplies and China demands higher interest on its loans? Credit card debt crisis and a plummeting stock market waiting in the wings? Time for a round of golf and a Martha’s Vineyard vacation.

I posted this yesterday, get ready for a huuuuge layoff by Bank of America. There are very hot rumors that they are going to close their mortgage business, which employs about 20,000 people. None of them will find new jobs. I’m scrambling like never before to find something before all these people get dumped on the street.

MetLife just announced it is going to sell its bank because of all the new regulatons which end up being discriminatory against insurance companies that own banks. Interesting that they have decided they would rather deal directly with the new Consumer Financial Protection Bureau on their mortgage business than stay with the bank and the OCC.

Businesses react to this in rational ways, which is to shed excess labor and curtail expansion.

The rational way to deal with falling demand is to lower the wages of employees until either your costs/prices are low enough to justify them, or enough quit. However, I suspect that there must be a law that effectively makes this rational behavior illegal.

However, I suspect that there must be a law that effectively makes this rational behavior illegal.

Count to 10 on July 22, 2011 at 12:16 PM

You are correct: The prospect of endless harassment by a combination of the State/Federal Unemployment bureaucracy and the out-of-control NLRB make it more rational to simply close the business and throw EVERYONE out of work.

These days there are two types of criminal action which the federal government cannot forgive:

No other company milks the tax laws like Government Electric. Its tax department is staffed by former members of the Treasury Department and the IRS. These people are well connected and GE has hundreds of lobbyists. Tax regulations have been passed explicitly for the benefit of GE.

I am looking for a new over the range microwave. Maytag is looking pretty good.

Employer must pay whatever insurance company decides (typically minimum 1%-1.5% of payroll), and the Workers Compensation bureaucracy and contingency-fee lawyers decide later who gets the money…without your input.

Not to sound overly snarky, but you still aren’t using a browser with an ad-blocker? REALLY?

Yes, I know you may be at work, have you tried Portable Apps on a USB thumb drive? Allows you to browse with an Ad or Script blocker. Personally I allow Hot Air’s static ads, but only allow scripts I approve. So usually the obnoxious video ads don’t play.

And I get to join the unemployment roll today! Just found out. Company is on life support and the hacking has started. Medical device startup company that just couldn’t get traction because no one in the health industry feels safe looking at new technology. Thanks, progressives!